See notes to financial statements.
DIME COMMUNITY BANK KSOP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2019
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See notes to financial statements.
1. DESCRIPTION OF PLAN
The following is a brief description of the Dime Community Bank KSOP (the “Plan”). This description of the Plan is provided for general information purposes only. Participants should refer to the Plan document
for more complete information.
Effective February 1, 2019, the trustee and record keeping services for the Plan were transferred to Principal Financial Group.
The Plan allows for employer discretionary profit sharing contributions of up to 3% of eligible compensation by the Plan Sponsor. No contributions were made to the Plan for the year ended December 31, 2019.
The plan allows for an employer matching contribution. Effective January 1, 2019, the Plan matched 50% of employee contributions up to 4% of eligible compensation.
The Bank makes a 3% safe harbor employer contribution annually to maintain the Plan’s Safe Harbor status. The annual safe harbor employer contribution is made in the first quarter of each year based upon the total
compensation through December 31st of the previous year. A contribution of $1,180,510 was made in March 2020, reflecting benefits for the year ended December 31, 2019.
Participants may also contribute amounts representing distributions from other qualified plans.
Participants vest in both employer discretionary and matching contributions as set forth in the following schedule.
All investment options are participant directed. Effective February 1, 2019, Principal Trust Company ("Principal" or "Trustee") acts as trustee for the Plan. Prior to February 1, 2019, Pentegra Asset Management
acted as the trustee for the Plan.
Transfers between investment alternatives and rollover contributions to the Plan are placed in any of the above investment options in multiples of 1%, at the election of the participant.
Participant loans are permitted, subject to current Internal Revenue Service ("IRS") statutes and regulations. Participants may borrow up to 50% of their vested account balance up to a maximum of $50,000.
Participants are permitted a maximum of two loans at any time under the Plan. Interest charged is fixed for the entire term of the loan and is commensurate with the interest rate then being charged in the area of the Plan Sponsor for loans
made under similar circumstances. The maximum loan term for the purchase of a principal residence may not exceed fifteen years and loans for any other reason may not exceed five years. At the time of origination, the loans are funded through
a reduction of benefit balances existing in the recipients’ participant accounts. Loan repayments are made by automatic payroll deductions and are fully applied back into the recipients’ participant benefit accounts. Participant loans that are
delinquent or unpaid at the time of participant termination from the Plan are considered deemed distributions and reclassified as participant distributions based upon the terms of the Plan document.
The following is a reconciliation of activity for notes receivable from participants:
* Total loan repayments of $606,466 included $328,810 of principal repayments and $277,656 of loan defaults, during the year ended December 31, 2019. Interest on participant loans totaled $54,073.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Plan are as follows:
The Plan's Stable Value Collective Trust Fund investment (the "Fund") is measured at Net Asset Value (“NAV”), as reported by the manager of the Fund, and as supported by the unit prices of actual purchase and sale
transactions occurring as of or close to the financial statement date. The
Fund provides for daily redemptions by the Plan participants. Full liquidation of the Fund requires a twelve-month advance notification. There are no other redemption restrictions, provisions or advance
notification requirements.
The employer stock, which is publicly traded, is carried at fair value based upon its quoted market price at the end of the year (level 1 input). At December 31, 2018, the Plan held 2,466,370 shares of employer
stock valued at $16.98, the closing price of Company common stock on December 31, 2018. At December 31, 2019, the Plan held 2,057,011 shares of employer stock valued at $20.89, the closing price of Company common stock on December 31, 2019.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods
are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting
date.
Net investment gain consists of gains and losses realized from the sales of investments, the net change in the unrealized appreciation or depreciation on investments, and interest and dividends earned.
Purchases and sales are accounted for on a trade-date basis. Interest income is recorded on the accrual basis and dividend income is recorded on the ex-dividend date. Realized gains and losses from securities
transactions are recorded on the average cost basis.
Management fees and operating expenses charged to the Plan for investments in the mutual funds are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and
operating expenses are reflected as a reduction of investment return for such investments.
3. FAIR VALUE MEASUREMENTS
In accordance with Accounting Standards Codification ("ASC") 820 the Plan classifies its investments into Level 1, which refers to securities valued using quoted prices from active markets for
identical assets; Level 2, which refers to securities not traded on an active market but for which observable market inputs are readily available; or Level 3, which refers to securities valued based on significant unobservable inputs that
reflect the Plan’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the
fair value measurement.
The following tables set forth by level within the fair value hierarchy a summary of the Plan’s investments measured at fair value on a recurring basis at the dates indicated.
There were no transfers between Level 1 and Level 2 during 2019.
4. EXEMPT PARTY-IN-INTEREST TRANSACTIONS
Parties-in-interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer, and certain others. Certain administrative functions
are performed by officers and employees of the Company or the Bank. No such officer or employee receives compensation from the Plan for the administrative functions he or she performs.
At December 31, 2019 and 2018, the Plan held 2,057,011 and 2,466,370 shares, respectively, of common stock of the Company. Dividend income received on these shares of common stock totaled $1,243,462 during the
year ended December 31, 2019.
Notes receivable from participants reflect party-in-interest transactions.
The Plan's payments of administrative expenses for recordkeeping fees to Pentegra Services, Inc. in the amount of $2,926 and to Principal in the amount of $77,043 also qualify as party-in-interest transactions.
Certain administrative fees are paid by the Plan Sponsor. Investment management fees, which are considered party-in-interest transactions, are charged to the Plan as a reduction of investment return and included in the investment income (loss)
reported by the Plan.
5. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter dated April 24, 2013 that the Plan complies with applicable sections of the Internal Revenue Code (the “Code”). Although the Plan
has been amended and restated since that date, including providing for the merger of the ESOP with and into the Plan, the Committee believes that the Plan is currently designed and being operated in compliance with applicable requirements of
the Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan. The plan administrator has analyzed the
tax positions taken by the Plan, and has concluded that as of December 31, 2019 and 2018, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the
financial statements. The Plan is subject to routine audits by taxing authorities, however, there are currently no audits for any tax periods in progress. The plan administrator believes it is no longer subject to income tax examinations for
years prior to 2016.
6. SUBSEQUENT EVENT
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which has spread to most countries, including the United States. The pandemic has adversely affected economic
activity globally, nationally and locally.
In March 2020, the United States declared a National Public Health Emergency in response to the COVID-19 pandemic. In an effort to mitigate the spread of COVID-19, local state governments, including New York (in
which the Bank has retail banking offices), have taken preventative or protective actions such as travel restrictions, advising or requiring individuals to limit or forego their time outside of their homes, and other forced closures for certain
types of non-essential businesses. The impact of these actions is expected to continue to have an adverse impact on the economies and financial markets in the United States.
The Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law at the end of March 2020. The CARES Act is intended to provide relief and prevent a severe economic downturn. The stimulus
package includes direct financial aid to American families and economic stimulus to significantly impacted industry sectors. The package also includes extensive emergency funding for hospitals and providers.
Subsequent to the impact of the pandemic, the market values of the investments of the Plan have been volatile. It is reasonably possible that there will be material, adverse impacts to the Plan Sponsor’s
business operations and financial results, which may have an impact of the valuation on shares of the common stock of the Company. The Plan Sponsor monitors the performance of plan investments on a quarterly basis.
SUPPLEMENTAL SCHEDULE
DIME COMMUNITY BANK KSOP
SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2019
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